Paretotõhusaks

Paretotõhusaks, also known as Pareto efficiency or Pareto optimality, is a concept in economics and game theory that describes a state of resource allocation where it is impossible to make any one individual better off without making at least one individual worse off. In simpler terms, a situation is Pareto efficient when no further improvements can be made without causing a disadvantage to someone.

The principle is named after the Italian economist Vilfredo Pareto. It is a criterion for judging the efficiency of an allocation of resources. If a situation is not Pareto efficient, it means that resources could be reallocated to benefit at least one person without harming anyone else. This process of reallocating resources to reach a state of Pareto efficiency is called a Pareto improvement.

A Pareto improvement is a change to a system that makes at least one participant better off, without making any other participant worse off. When no more Pareto improvements can be made, the system is considered to be in a state of Pareto efficiency. It is important to note that Pareto efficiency does not imply fairness or equity. A situation can be Pareto efficient but still highly unequal, with some individuals having significantly more resources than others. The focus is solely on the absence of waste or the possibility of making someone better off without harming anyone.

The concept is widely used in various fields, including welfare economics, public policy analysis, and the study of markets. It provides a benchmark against which different economic outcomes can be compared, helping policymakers and theorists understand whether resources are being utilized in the most productive way possible.